Limitations to Bankruptcy Protection
Bankruptcy filing is a big step in the financial situation of any financial entity, whether personal or for a business. However, not all debt is discharged during a bankruptcy proceeding and you will not receive bankruptcy protection from all debts. It is important during the preparation period of a bankruptcy that you participate in full disclosure with your bankruptcy attorney so that you are not taken by surprise with nondischargeable debts at the end of the bankruptcy. Your bankruptcy lawyer can provide the best advice for your particular situation and can determine which of your debts are not covered by bankruptcy protection.
What Types of Debts are Nondischargeable in Bankruptcy?
Most unsecured debt – debt not guaranteed by a tangible asset, like a credit card – can be discharged as a result of a bankruptcy filing. However, some unsecured debt is categorized as “priority,” which mean it cannot be discharged and is not part of bankruptcy protection. This includes domestic support obligations (child or spousal support), income taxes and other government debts. Student loans, while not a “priority” unsecured debt, cannot be discharged unless there is evidence of a hardship like a disability preventing employment.
Full disclosure of your debt situation is imperative for a bankruptcy filing as failure to do so can result in an undisclosed debt becoming un-dischargeable and you will continue to be responsible for paying it. Fraudulent debt of any sort may also be non-dischargeable under certain conditions.
Debt items including property taxes, condominium fees and dues, pension or retirement fund loans, debts from violating securities regulations or laws, and debts from willful injury or as a result of a wrongful death are not dischargeable and do not qualify for bankruptcy protection.
While bankruptcy protection can provide an individual or business with financial relief and a ‘fresh start,’ it does not automatically provide complete relief from all debts that one may incur.
A Law Firm that Understands Bankruptcy Protection
Finding a reputable bankruptcy attorney can help you navigate the complex waters of bankruptcy to find a feasible solution to your financial challenges. Groce & DeArmon, one of southwest Missouri’s leading bankruptcy law firms, can provide you with the answers and guidance that will help make the best of a challenging situation. With over a decade of experience in bankruptcy law, Shari DeArmon and her bankruptcy attorney team are ready to assist you in managing your finances with a bankruptcy filing. Contact Groce & DeArmon today for your free consultation!